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Minister of Finance Tito Mboweni announced the resignation of non-executive directors from the board of the South African Special Risk Insurance Association in a statement on Monday.
Without elaborating, he said he welcomed the resignation.
According to its website, Sasria is the only short-term insurer that provides special risk cover to all individuals and businesses that own assets in South Africa, as well as government entities, specialising in cover for civil commotion, public disorder, strikes, riots and terrorism.
The statement by Mboweni did not explain the reasons for the resignations, but highlighted the increasing risk in Sasria's operations. Mboweni said he would reconstitute the board of directors within the next two weeks "after consulting with Cabinet and all relevant stakeholders".
Rising risk
"The board of directors has steered this ship in a tough environment, where short-term insurers are grappling with ever increasing challenges and rising costs for insurers such as the burning and looting of business premises during protests," said Mboweni.
The resignations come as external auditors noted increased insurance risk as a result of strikes, protests and other special risks, despite the fact that the company has received five clean audits in a row.
According to Sasria’s 2018 integrated report, Sasria's claims are extremely volatile and are connected to political risk, unemployment, poverty, inequality, service delivery, labour issues, student protests and, in some instances, water and drought issues.
"In the past few years, Sasria has experienced high and increasing loss ratios as a result of increases in service delivery protests, student issues, strikes and large claims in various classes of business," the integrated report said.
In its report, Sasria said it remained confident that it would be adequately capitalised in the event of the deterioration of the underwriting risk.
